February 17, 2014 / 2:40 AM / 4 years ago

Nikkei rebounds in choppy trade; Rakuten slides

* Nikkei touches 1-1/2 week low before erasing losses
    * Weaker-than-expected Q4 GDP reading weighs on market
    * Rakuten dives after acquisition announcement

    By Tomo Uetake
    TOKYO, Feb 17 (Reuters) - The Nikkei stock average edged up
on Monday, taking heart from gains on Wall Street, although
trade was choppy after weaker-than-expected Japanese economic
growth data soured investor sentiment.
    The benchmark Nikkei fell as much as 0.7 percent to
14,214.60, its lowest since Feb. 6, following the GDP data,
before short-covering helped it erase losses to last trade up
0.3 percent at 14,349.32.
    Many market players are likely to have had big short
positions already, given the massive short-selling seen in
recent sessions. Short-selling accounted for almost 35 percent
of the total selling on Friday - an unusually high level.
    The market also drew some comfort from data published late
on Friday, which showed foreign investors became net buyers of
Japanese shares in the first week of February for the first time
this year after relentless selling in January.
    Foreign investors bought a net 41.2 billion yen ($404
million) of Japanese stocks in the Feb. 3-7 week after selling a
net 1.17 trillion yen worth in January.
    Yet traders say the market needs more aggressive buying from
foreign investors, who bought 15.1 trillion yen of Japanese
shares last year, given that their buying was the driving force
behind the Nikkei's 57 percent rally last year.
    U.S. stocks edged up on Friday, with major indexes notching
a second straight week of gains and the benchmark S&P 500 
nearing a record high.
    The U.S. benchmark has almost erased its losses since the
start of year. By contrast, Japanese shares have underperformed
most other markets in 2014, shedding more than 12 percent, and
certainly have not been helped by a string of weak economic
    Japan's gross domestic product rose 0.3 percent in
October-December from the previous quarter, well below the
median 0.7 percent expansion forecast by economists.
    "The biggest factor behind the weaker-than-expected GDP
growth is lacklustre external demand. Domestic demand was weak
too, which is not an encouraging sign," said Junko Nishioka,
chief economist at RBS Securities.
    "It is nothing to despair about since economic growth is
being maintained, but lacklustre domestic expenditure puts a
damper on the impact that recent government economic policies
are supposed to have," she said.
    The yen strengthened to around 101.40 per dollar,
near the 2-1/2-month high around 100.75 hit earlier this month,
pressuring shares of exporters.
    Mazda Motor Corp, the fourth most-traded stock on
the main board on Monday, retreated 0.6 percent and Panasonic
Corp lost 0.9 percent.
    Rakuten Inc dived as much as 13.2 percent after the
e-commerce company said it would buy call and messaging app
provider Viber Media Inc for $900 million in a deal that would
more than double the number of users in its digital empire.
    "The market sees the purchase price as too high," said Kyoya
Okazawa, head of global equities and commodity derivatives at
BNP Paribas in Tokyo.
    Rakuten was the fifth-most traded stock on the Topix.
    The Topix index was up 0.3 percent at 1,187.55 in
subdued trade, with volume at 29 percent of the full daily
average for the past 90 trading days.
    The JPX-Nikkei Index 400, a recently introduced
gauge comprising firms with high return on equity and strong
corporate governance, was up 0.3 percent.
    The Bank of Japan kicks off a two-day policy meeting on
Monday. The central bank is widely expected to leave monetary
policy unchanged.

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